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In the largest-ever trade finance in Indian steel sector, JSW Steel has received $700 million (₹4,970 crore) for supplying steel over the next five years to Duferco International Trading Holding, a global steel trader and distributor.
Bhushan Power buy
Both companies had signed the advance payment and supply agreement last Wednesday.
The pact will help JSW Steel part-finance its ₹19,650-crore Bhushan Power acquisition through the insolvency process.
It has already accepted the letter of intent, issued by the resolution professional of Bhushan Power, and is in the process of tying-up the funds.
The financing structure with Duferco International provides JSW long-term funding to complement its plans for growth, secured by committed export of steel products to DITH.
For DITH, the transaction assures a captive supply of various steel products from JSW over the term of the agreement. In the last 15 years, both companies had partnered in various commercial ventures.
The deal has been arranged and financed by the global banks BNP Paribas, Citibank, Credit Suisse, ING, Mashreqbank, Natixis, Societe Generale, and Standard Chartered Bank.
Seshagiri Rao, Joint Managing Director, said the structured long-term trade finance transaction is an important deal in diversifying the sources of financing for JSW Steel.
The deal will not only enable JSW raise funds at competitive rates, but also assures incremental volume of sales in export markets, he added. Matthew De Morgan, DITH Group Chief Executive Officer, said the deal corroborates the company’s faith in sustainability of steel trading, and is indeed a material statement of confidence in JSW as reliable partner.
To scale up capacity
JSW Steel has an installed capacity of 18 mtpa, and has plans to scale it up in India and overseas with 12 mtpa at Vijayanagar, Karnataka.
The DITH Group has a world-wide network of offices and processing sites in 82 countries across five continents.
It has over 49,000 customers in 108 countries and recorded turnover of more than $7 billion, with sales of 12 million tonnes per annum.
Duferco is a subsidiary and the principal operating company within a group controlled by Duferco International Trading Holding.
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